EU insider David Marsh on the German constitutional court ruling: omfif.org/2020/05/confli…
Tuesday’s judgment marks a turning point in many ways. For the first time, a German court has voiced fundamental disagreement with a major European ruling over integration.
Tuesday’s judgment marks a turning point in many ways. For the first time, a German court has voiced fundamental disagreement with a major European ruling over integration.
In unusually harsh and unflattering terms, the constitutional court has stated that the European Court of Justice, in its judgment of December 2018, has exceeded its competence to assess the validity of the Bundesbank’s participation in the ECB’s asset purchases.
This throws doubt not just on the future of the five-year-old €2.2tn public sector asset purchase programme, the focus of the lawsuit, but also on the shape and size of the €750bn pandemic emergency purchase programme decided in March,
a central part of Europe’s crisis-fighting arsenal. In view of the legal uncertainties over the precise constellation of both programmes, the ECB’s pledge to increase the PEPP may now be in doubt. The constitutional court has no jurisdiction over the ECB.
Yet, by qualifying an ECJ ruling as unlawful (ultra vires), the court has made unexpected use of its ultimate power to examine whether or not Germany’s participation in European integration violates European treaties and thus infringes the German constitution.
The court has introduced a blatantly German national approach, attempting to influence what was designed to be an independent supranational European institution. The German Bundesbank, government and parliament will be subject to near-insoluble conflict between apparently
opposing national and European policy considerations. Moreover, the hallowed Germanic principle of central banking independence appears pitted against an equally onerous obligation to follow the strictures of the constitutional court.
In an OMFIF briefing, Hans-Olaf Henkel, a former president of the Federation of German Industry and a leading member of one of the four ‘complainant groups’ behind the lawsuit, termed the constitutional court ruling ‘a declaration of war against the ECB and against the ECJ’.
Placing the Bundesbank in mid-dispute, the court laid down ‘a transitional period of no more than three months’ beyond which the German central bank ‘may no longer participate in the implementation and execution of the ECB decisions at issue.’
The court listed as affected citizens ‘shareholders, tenants, real estate owners, savers or insurance policy holders’. These categories reflect segments of the German population who have vocally opposed ECB monetary policy.
David Marsh is Chairman of OMFIF
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